Recently, I’ve been organizing notes on stock technical analysis and found that many beginners still have a shallow understanding of candlestick charts. In fact, back in 1990 when the Chinese stock market opened, candlestick charts were already in use. To be honest, over the years, research on candlestick charts mainly relies on the Japanese theory. Most people have only learned fragmented knowledge such as single and double candlesticks, and a truly systematic pattern analysis is not yet complete.

I must admit that indicators and candlestick charts are indeed essential tools for stock trading, but these technical analysis methods are ultimately just references, not absolute truths. Conclusions drawn from a classic candlestick chart or commonly used indicators should be analyzed specifically according to the actual situation during operation; rigidly applying them without context is not advisable.

Candlestick charts are also called Yin-Yang candles, originating from rice market trading in Japan’s Edo period. Later, they were introduced into the stock market and are now especially popular in Southeast Asia. Their popularity comes from being intuitive, highly three-dimensional, capable of relatively accurately predicting future market trends, and clearly showing the balance of buying and selling forces.

Regarding types of candlesticks, the classification is quite detailed. There are 48 types of candlesticks, divided into 24 bullish (yang) and 24 bearish (yin) types. For bullish candles alone, they are categorized into small bullish, medium bullish, large bullish, and doji (cross) types. Each category is further subdivided into six patterns based on body size and shadow length. In simple terms, the larger the body of a bullish candle, the stronger the buying pressure, and the more likely the market will rise afterward; a longer lower shadow indicates strong buying momentum, also favoring an upward trend; a longer upper shadow suggests strong selling pressure, with a tendency for the market to fall. The logic for bearish candles is the opposite: larger bodies indicate stronger selling pressure, and the market generally declines afterward.

The most practical are these five candlestick patterns, mastering which can greatly improve judgment accuracy.

**Morning Star** typically appears at the end of a downtrend. The first day shows a long bearish candle indicating continued decline. The second day gaps down and forms a doji or hammer, creating a gap from the first day, indicating that the downward momentum is weakening. The third day then shows a long bullish candle with strong buying, signaling a market reversal. This signal is even more effective when combined with volume analysis.

**Evening Star** is the opposite, appearing during an uptrend. The first day is a long bullish candle continuing upward. The second day gaps up and forms a doji or hammer, and the third day shows a long bearish candle with strong selling. This is a clear reversal signal and should raise alertness, as it may be an excellent opportunity to sell or avoid entering.

**Three White Soldiers** is a common bullish pattern, where three consecutive days close higher than the previous day, with opening prices within the previous day’s real body, and closing near the high of each day. While the overall trend is likely to continue upward, specific judgment still needs to be flexible.

**Three Black Crows** is the opposite of Three White Soldiers. During an uptrend, three consecutive long bearish candles form a step-down pattern, with each close below the previous day’s low. When this pattern appears, it usually indicates that the stock price is near a top or has been at a high level for some time, with increased risk of a decline afterward.

**Gap Up and Double Black Crows** often occur at market tops. It starts with a long bullish candle continuing the upward trend, followed by two days of gap-up openings that close lower, with both days ending in bearish candles. The bulls’ momentum is exhausted, and the trend weakens significantly, increasing the likelihood of a reversal. When encountering this situation, it’s wise to stay alert, consider taking profits or reducing positions, and wait for clearer market direction before acting.

Ultimately, candlestick analysis should be combined with volume and other indicators for comprehensive judgment. Relying solely on patterns can be misleading. The most important thing is to continuously accumulate experience in live trading and develop your own decision-making system.